When starting out in small business, most people’s main choice for funding will be a business loan, and these are a great way to get your business idea off the ground if you don’t have a lump sum sitting around (and in reality, who does apart from the super rich!)

There are several types of business loan, including short term, term and equipment financing, and the type a business uses is dependent on variable such as the amount of money they need to borrow, the duration they will need to pay it back and what the money is required for.

One particular question that many enterprising business people raise, aside from being concerned regarding the approval of their loan, is whether the outcome of them applying for a business loan will be detrimental to the credit rating of them or their partner or spouse. It’s an understandable worry, as although business people plan for businesses to be a success, it is wise to be cautious and look after our personal affairs.

The best way to ensure your business loan has no bearing on your personal credit rating is to keep the two entities separate. If you make sure your business has a separate identity and its own Tax ID, and open a separate bank account registered at a different address this provides the foundation on which to begin building your business credit, separate from your personal credit, meaning you can obtain credit under the business name.

For a brand new business the bank or other lender will often take your personal credit into account, as they have no business credit score to use, and so in this case a business loan may affect your personal credit score and can lower it slightly.

Where a business already exists, a loan application is more likely to be accepted without the need to take your personal credit rating and status into account.

Like most issues relating to finance, with business loans there is no single rule that applies for everyone, as a range of factors can affect your application and these vary quite widely from case to case. However as a guideline, loans for a new business are more likely to affect your personal rating than borrowing money for an existing company.

If you need business debt help then visit The Business Debt Advisor for friendly and helpful advice forbusinesses in debt.